The BFG Report

Welcome to the 2017 Winter Edition of the BFG Report

Home Care – Greater Choice

Since February 2017, some welcome changes have been made to the home care system, giving greater choice to older Australians. In the years ahead, the aging population means the number of people requiring home care is going to increase so it is important that as people age they have choice about the care they receive.

From February 2017, all home care packages are provided to individuals from a national pool rather than to home care providers under a funding allocation process. This means that once your funding has been approved, based on your individual needs and situation, you can change providers without having to reapply for funding. Also, any unused funds remain yours. This change is expected to create a more competitive, customer-driven home care industry, empowering people to shop around for providers that are better able to meet their needs.

Case Study

Megan has been assessed and approved to receive a home care package. Let’s see her options before and after the home care reforms.


Under the old system, Megan does not have a choice of provider.

The provider allocated to her:

Charged 10% administration fee and 25% case management fee. This left only 65% of her funding for actual care costs.

Supplied a package that was not to her liking. Megan prefers to go to bed at 10pm but her provider insists on providing services that require her to go to bed at 8pm.\

Offered 10 hours care per week when she preferred 14 hours.


After February 2017, there are more service providers that Megan can consider. One offered to: 

Charge a 2.5% administration fee and 10% case management fee. This means that more of her home care could be used for actual care costs. This would be 87.5% compared with her current provider who allocated only 65% to actual care.

Accommodate her specific needs around the timing of visits each day and the number of carer hours per week.

Megan proceeds to negotiate with a new provider.

If you or a family member are currently receiving a government subsidised home care package you may wish to consider reviewing your current service provider. Further information on home care can be found by visiting

Investment Market Review – Quarter Ended 31 March 2017

Asset Class – Australian Shares
1 year is 20.2% p.a.
5 year is 10.8% p.a.
10 year is 4.2% p.a.

Australian shares rose 4.9% in the December quarter. The strongest performing sector was financials, with a gain of 10.8%, followed by utilities with an increase of 7.8%, the energy sector climbed 7.4% and materials increased by 7.2%. The financials sector led the market higher as investors moved into cyclical sectors following a rise in bond yields and commodity prices. Iron ore and West Texas Intermediate crude oil prices appreciated 41% and 11% respectively, helping the materials and energy sectors post strong results. Sectors that performed poorly included health care, declining by 8.8%, telecommunications which fell 4.3% and the consumer discretionary sector which lost 2.9%. One major reason for the poor performance of the health care sector was a large decline of 55.9% in Sirtex Medical Ltd after they announced weaker than expected sales growth.

Asset Class – Listed Property Trusts
1 year is 6.4% p.a.
5 year is 16.8% p.a.
10 year is 0.6% p.a.

The A-REIT sector declined 0.7% during the December quarter. The sector once again underperformed the general market as global bond yields continued to move higher. This was partly due to expectations of increased government spending and lower taxes in the United States following the election of President Trump. Property shares generally suffer from increasing rates because of the drag on earnings, but A-REITs often have inflation-linked leases, thereby delivering a degree of protection in terms of the rents they receive. Despite the recent pullback, the sector still appears expensive on an historic, relative and absolute basis.

Asset Class – International Shares
1 year is 15.8% p.a.
5 year is 16.9% p.a.
10 year is 5.5% p.a.

International shares performed strongly during the December quarter despite another period dominated by political events — the most notable being the US Presidential election. Financial market investors revised their expectations for government spending and tax policy in the US following the election and this was an important factor driving share valuations, the increase in government bond yields and the appreciation of the US dollar. The S&P 500 gained 3.3%, the FTSE 100 rose 3.5%, the German DAX 30 was up 9.2% and the Nikkei 225 climbed 16.2%. The MSCI World Index in Australian dollar terms increased by 8.3% in the December quarter. The European Central Bank left the deposit rate unchanged at negative 0.40% but decided to continue the current level of monthly asset purchases of €80 billion until the end of March 2017, after which there will be a reduction to €60 billion per month until the end of December 2017. The US Federal Reserve increased the federal funds rate by 25 basis points to a target range of 0.50 — 0.75% at its December meeting. The decision was widely anticipated because data had been increasingly supportive of an interest rate increase.

Asset Class – Fixed Interest
1 year is 2.1% p.a.
5 year is 5.0% p.a.
10 year is 6.2% p.a.

In the US and Australia, long term interest rates rose more than short term rates, causing the yield curve to steepen. The US 10-year bond yield rose 85 basis points and the Australian 10-year bond yield rose 86 basis points. In the US, government bond yields moved higher as a result of the interest rate increase and because of expectations Donald Trump’s policies will include a significant amount of spending on infrastructure as well as tax cuts, thereby boosting economic growth and inflation. Australian bond yields were not immune and quickly followed the United States lead due to the high correlation between the two countries’ government bond yields.

Asset Class – Cash
1 year is 1.9% p.a.
5 year is 2.7% p.a.
10 year is 4.0% p.a.

The RBA left the cash rate unchanged at 1.50% during the December quarter. This was despite uncertainty regarding the strength of the labour market, concerns that inflation would remain low for some time and the weaker than forecast GDP growth in the September quarter. Rising oil prices and downside pressure on the Australian dollar as a result of the US Federal Reserve’s intention of raising rates two or three times in 2017 will likely cause the RBA to leave rates on hold during 2017.

High Yielding Internet Savings Accounts

Financial Institution and Interest Rate

RaboDirect Bank – Rate 3.05% p.a.

ME Bank Online Saver- Rate 3.05% p.a.

ING Savings Maximiser – Rate 3.00% p.a.

Rams Saver – Rate 3.00% p.a.

Citi Online Saver – Rate 2.85% p.a.

BankWest – Telenet Saver – Rate 2.75% p.a.

Rates are subject to conditions and change.

Rates are correct as at 31/052017.